Cotton production in India needs to be reorganized in order to increase productivity, reduce cost of production, and secure stable returns to the farmers. Cotton is produced in India under varied conditions and entails certain heterogeneity in terms of yield, cost and return. The common cause of concern is how to reduce the ever rising costs of production and increase value addition to the farmer. Industry needs extra long staple and clean cotton for value-added production. In the presence of anonymous agents working through spot markets, production decisions suffer from inefficiencies owing to information asymmetry and bounded rationality. There is a need for an informed coordinating agent between farmer and other input providers on the one side, and to supply managerial technology and link up final buyer, on the other. Such vertical integration strategies are capable of avoiding the intermediate channels of middlemen, raising direct benefits by enhancing yield and quality and producing internal economies. This paper sets out to analyze the e-safal experiment in six villages of Andhra Pradesh in the light of such context of vertical integration.

Cotton production has significantly increased in India in the last two decades. In spite of an impressive growth, India’s cotton farming is considerably stressed out in terms of returns. There is an urgent need to improve the quality and productivity on the one hand, and reduce cost of production, on the other. Cotton supply chain, from raw cotton to yarn production, is presently organized through discrete markets, coordinated by imperfect market mechanisms.

There is little means through which the industry can reach out to the farmers in the present structure. Cotton farming is in no enviable position, where constraints on information, extension, marketing, credit, weather, and environment exist. Indian cotton suffers from lower staple length and contamination. Vertical integration perhaps addresses several of these questions effectively. Integration of farm production at the upstream with the various service providers and to spinning mills in the downstream can play a crucial role in raising the productivity and quality of cotton. While we believe that it can benefit agriculture as well as industry, the objective of this paper is to show the potential benefits to the farmers.

Agricultural Economics Journal, Rubber Production, Nontraditional Areas, Capital Investment, Government Agencies, Community Processing Centers, Rubber Plantation, Government Forest Lands, Goalpara District, Economic Empowerment.